For storage, costs per ton for bales were significantly higher than for corn grain and pellets for all plant sizes investigated. For plant sizes above 60 million gallons per year, the storage costs for bales was almost three times that of pellets. About 85 percent of the storage cost for bales was attributed to the capital, operating and maintenance costs of new bale-handling equipment.

In the end, the cost of converting corn stover and switchgrass into pellets outweighed the transportation and storage savings.

"There needs to be research focused on increasing the efficiencies and reducing the losses in densifying bales into pellets or briquettes since the potential economic gain in transportation and storage will make a huge impact in reducing the logistics cost," Ileleji said.

Ileleji said the findings are important because they give ethanol producers a baseline for the costs and logistical requirements of supplying different forms and types of cellulosic biomass feedstocks.

"Without solving the logistical issues, commercial production of second-generation biofuels will not take place," Ileleji said.

The study was restricted to finding costs before conversion to ethanol. Ileleji will do further research on the cost and benefits of processing densified cellulose feedstocks such as pellets into ethanol compared with using baled feedstock in order to determine whether the densification would reduce downstream processing costs.

The information for the study was gathered from ethanol plant builders, ethanol producers and published data. Duke Energy and the Purdue Energy Center funded the research.